LEADERSHIP DEVELOPMENT AND ITS EFFECTS
ON ORGANIZATIONAL PERFORMANCE
ARCHNES
MASSACHUSETTS INST
OF TECH$NOLOGY
Jose A. Sanhueza
JUN 15 2011
B.S. Industrial Civil Engineering
Pontificia Universidad Cat6lica de Chile, 1999
Master of Science
Pontificia Universidad Cat6lica de Chile, 1999
LIBRARIES
SUBMITTED TO THE MIT SLOAN SCHOOL OF
MANAGEMENT IN PARTIAL FUFILLMENT OF THE
REQUIREMENTS FOR THE DEGREE OF
MASTER OF SCIENCE IN MANAGEMENT
at the
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
June 2011
C Jose A. Sanhueza 2011 All rights reserved.
The author hereby grants to MIT permission to reproduce and to distribute publicly paper and
electronic copies of this thesis document in whole or in part in any medium now known or
hereafter created.
Signature of Author:
_
_
_
_
_
_6,_20_
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MI laay 6, 2011
MIT Sloan School of Management
Certified by:
John Van Maanen
Studies
Professor
of
Organization
Edw'i4. Schell
Thesis Advisor
Accepted by:
Stephen J. Sacca
Director, MIT Sloan Fellows ProgrfrTin Innovation and Global Leadership
E
2
LEADERSHIP DEVELOPMENT AND ITS EFFECT
ON ORGANIZATIONAL PERFORMANCE
by
JOSE A. SANHUEZA
Submitted to the MIT Sloan School of Management on May 6, 2011
in partial fulfillment of the requirements for the degree of
Master of Business Administration
ABSTRACT
The current environment demands a better quality of leadership in organizations. In order to improve
leadership capabilities, companies can create leadership development programs. However, not all
companies embrace leadership development programs. Those who do usually have several types of
programs and treat these programs as part of their strategic plan to address challenges that companies
are likely to face in the future.
Reviewing the leadership research, I find there is a positive relationship between leadership
development programs and organizational performance. Reviewing the leadership program research, I
find that most leadership development programs were created in response to significant challenges
organizations were facing.
I present the MIT Sloan Fellows program, as an alternative program that some companies and
individuals are choosing for leadership development. The program uses the Four CapabilitiesModel
as a leadership theory, focusing on the tasks and capabilities needed of leaders.
I administered two surveys to the Sloan Fellows Class 2011. Surveys results suggest some of the
benefits the program provides to individuals and organizations. Among these findings, my evidence
shows that a higher percentage of "leader companies" have leadership development programs, in
contrast to "follower companies" that usually do not have leadership development programs.
Thesis Supervisor:
Title:
John Van Maanen
Edwin H. Schell Professor of Organization Studies
4
ACKNOWLEDGEMENTS
First I want to thank Professor John Van Maanen, for his continuous and encouraging
support as my thesis advisor. His insight and recommendations guided my through the
extensive work done to create this document.
I want to express my gratitude and appreciation to my cohort in the MIT Sloan Fellows
Program, who helped me by answering the surveys and giving their generous advice.
Specifically, I want to thank Eduardo Martins, Jason Munshower, Takaaki Sato, Takuya
Sugiyama, Hiroaki Takaoka and Jason Tama, for allowing me to contact their companies for
information. To Yusuf Bashir, Ashish Das, Luis Filipe Cavalcanti and Takayuki Tsuchida,
thanks you for your generous contribution and support.
I am grateful to the MIT Sloan Fellows Program office; especially to Mr. Stephen Sacca for
supporting me in the Sloan Fellow Program. Also, thank you for sharing your reflections and
experience about the program.
I would like to acknowledge the support from the Chilean Government, through CONYCIT
sponsorship and the Fulbright Commission sponsorship, in the MIT Sloan Fellows Program.
I also want to thank my editor, Cherie Potts, who helped me complete this document.
I want to thank my daughter Emilia, for her inspiring smiles and kisses during the hard times.
She is our most valuable legacy.
My finally words of thanks are for my wife Mariela Cabezas. She joined me in this venture,
facing multiples new challenges and work during this year. Your love supports me to be a
better student, father and man.
6
TABLE OF CONTENTS
CHAPTER 1.
INTRODUCTION ..................
1.1
Motivation and Objectives ................................................
............
...........
...... 10
10
1.2
Purpose of T hesis ................................................................................................................
10
1.3
Th esis O utline .....................................................................................................................
11
CHA P TER 2.
LEA DER SH IP ......................................................................................................
2.1
D efinition and Literature Review ....................................................................................
2.2
Effects of Leadership in Organizations ......................................
2.3
Leadership Fram ew ork........................................................................................................18
2.4
Leadership M easurem ent ....................................................................................................
13
13
.... 15
21
CHA P TER 3.
LEADERSHIP DEVELOPMENT ...................................
3 .1
L iterature R ev iew ................................................................................................................
24
24
3.2
Types of P rogram s ..............................................................................................................
28
3.2.1
3.2.2
3.3
In-house and Ongoing Work Programs ..........................................................................
U niversity Program s ...........................................................................................................
Measuring the Return on Investment ..............................................................................
30
31
32
CHAPTER 4.
LEADERSHIP DEVELOPMENT AND ORGANIZATION PERFORMANCE.....35
4.1
Definition of Organizational Performance
.......................................
35
4.2
Leadership Development and Performance: Literature Review ....................................
36
MIT SLOAN FELLOWS PROGRAM..............................................................42
CHAPTER 5.
........ 42
............................................................
5.1
History, Evolution, and Goals
46
5.2
Leadership Content in the Sloan Fellows Program .........................................................
5.2.1
5.3
Leadership Development in Sloan Fellows' Organizations................................48
Sloan Fellows Class of 201 1: Survey Analysis................................................................50
5.3.1
5.3.2
5.3.3
5.3.4
5.3.5
5.3.6
5.3.7
5 .4
Motivation for Organization Sponsorship .....................................................................
....................................
Motivation for Executives ...........
Company Programs for Leadership Development.............................
...........................
CEO and Senior Management Team Leadership................................................................55
Priority of leadership development programs . ............................
......
L eadership outcom e............................................................................................................59
Impact of Sloan Fellows Program on leadership capabilities.............................................59
A lum n i Survey ....................................................................................................................
CONCLUSION AND FURTHER RESEARCH .............................
CHA P TER 6.
E X HIB IT S ............................................................................................................................................
B ib liog rap h y .........................................................................................................................................
50
52
53
57
61
...... 63
66
87
List of Figures
Figure 3-A: Leadership Development Programs ..............................................................................
29
Figure 4-A : Frequency of Program U sed. ............................................................................................
40
Figure 4-B: Reasons to Create a New Leadership Development Program......................................40
Figure 5-A: Leadership Element in the MIT Sloan Fellows Program...............................................47
Figure 5-B: Priority Ranking of HR Initiatives .........................................
49
Figure 5-C : Type of Program s ..............................................................................................................
49
Figure 5-D: Company's Motivation for Sponsoring Sloan Fellows................................................51
Figure 5-E: Reasons for Self-Funding ..............................................................................................
51
Figure 5-F: Priorities for Coming to SF Program..............................................................................52
Figure 5-G: Priorities: Self funded and Sponsored............................................................................52
Figure 5-H: Types of "on the job" Programs Used by Sloan Fellows' Companies...........................53
Figure 5-I: Types of "off the job" Programs Used by Sloan Fellows' Companies ..........................
54
Figure 5-J: On-the-job Training Programs, by Company Size.........................................................54
Figure 5-K: Off-the-job Training Programs by Company Size.........................................................55
Figure 5-L: Formal Training for CEO and Senior Management .......................................................
56
Figure 5-M : D istributed Leadership .....................................................................................................
57
Figure 5-N: Priority of Corporate Programs in Organizations .........................................................
57
Figure 5-0: Difference Between Leader Companies and Others ....................................
58
Figure 5-P: Improvement in Leadership Capabilities........................................................................60
Figure 5-Q: Evaluation of Personal Achievements from Participating in SF Program....................60
Figure 5-R: Sloan Fellows Alumni Survey.......................................................................................61
Figure 6-A: Longitudinal Assessment of Leadership Capabilities and Organizational Performance (A
Hypothetical Illustration)......................................................................................................................65
List of Tables
Table 2-A: Representative Leadership Theories
.........................................
14
Table 2-B : The Four Capabilities Model..........................................................................................
19
Table 3-A: Leadership Program, Timing and Target .....................................
28
Table 3-B: Average Return on Leadership Development Program.................................................34
Table 4-A: Managerial Training and Organization Performance .....................................................
36
Table 4-B: Outcomes of Training Programs...........................................37
Table 4-C: Group 1. Statistical Analysis..................................................................38
Table 4-D: Group 2. Type of Leadership Programs (n=15) ................................
39
Table 4-E: Group 2. Outcomes of Leadership Programs..................................................................
41
Table 5-A: Changes into Top 20 Companies' Representation in the MIT Sloan Fellows Program.....45
Table 5-B : C om panies C ontacted .........................................................................................................
Table 5-C: Training Program in SFs' Companies
..................................
48
.....
58
CHAPTER
1.1
1.
INTRODUCTION
Motivation and Objectives
As an Industrial Civil Engineer, my goal is to lead an organization, to apply the
technical skills I developed during six years at university, and to become a successful
manager. The most difficult challenges I have faced so far in my eleven years of work
experience-six as CEO of Refricentro S.A., a Chilean engineering company-were not
caused by complex technical issues. Rather, the biggest challenge was to become a strong
leader who could develop a successful and profitable path of growth for my firm.
Despite the successes achieved to date, the tasks of leadership remain tough.
Sometimes I feel my personal leadership skills are insufficient, and I know I need to improve
my ability to lead in order to obtain better results for the firm. To realize these goals, I
applied to the Sloan Fellows Program in Global Leadership and Innovation at MIT.
1.2
Purpose of Thesis
My reason for writing a thesis is aligned with my personal goal to become a better
leader and to understand the relation between leadership development and organization
performance. My objective is to obtain a comprehensive understanding of why leaders are
important, what companies can do to develop leadership, and to learn if developing leaders is
good for individuals as well as for organizations.
During this year spent as part of the Sloan Fellows program and creating this thesis, I
have discovered how deep, broad, and complex is the topic of leadership. The literature is
full of theories, best-practice recommendations, authors, books, research, and articles about
leaders and leadership. However, literature related to the relationships between leadership
and performance is scarce, and few studies have been undertaken.
In my own research, I found literature about what successful companies are doing to
train their executives and develop leaders. In addition, the relationships built within the
cohort of Sloan Fellows gave me a global perspective on these practices and cultural beliefs.
I discovered that not all organizations are concerned about leadership development. Hence, in
this thesis, my hypothesis is that leadership development is a critical and strategic task that
all organizations should pursue.
1.3
Thesis Outline
In Chapter 2, I provide an overview of the leadership literature, and review some
definitions and theories. I provide examples of the effect of leadership on organizations. I
present the leadership framework developed at MIT, which I will use later in the thesis to
define leadership and leaders' behavior. Finally, I describe tools developed at MIT to
measure leadership capabilities at the individual level.
Chapter 3 discusses the concept of leadership development, focusing on programs
used for this purpose. Various examples of leadership development in several well-known
companies are discussed briefly. I end with a literature review on measuring return on the
investment for these types of programs.
In Chapter 4, the relationship between leadership development and organizational
performance is presented. I review two meta-analysis studies, as well as leadership
publications obtained from databases available at the MIT Library.
Chapter 5 is an in-depth analysis of the Sloan Fellows Program, which I use as an
example of a U.S. university program that features leadership training as one of its core
activities. In a survey of the Sloan Fellows Class of 2011, my goal was to identify and
understand leadership development activities in each organization that sponsored a Sloan
Fellow this year.
The final Chapter provides a summary and some conclusions obtained from my study
of leadership, followed by ideas for future research on leadership.
CHAPTER
2.1
2.
LEADERSHIP
Definition and Literature Review
Leadership is a broad topic. Since ancient times, leadership principles,
responsibilities, traits, morals, ethics, and behavior have been widely described, and the topic
remains relevant in every culture. With more than 154,000 links on Google and over 66,500
books available on Amazon, it is apparent that concept of leadership continues to be popular
(Bass, 2009). In fact, today's business environment demands an even better understanding of
leadership. A "VUCCA" 1 world surrounds us, new forms of organizations have evolved, yet
the strategic advantages that flow from strong leadership remain critical (Van Maanen, 2010
a). The leader's role in the workplace is to create a valuable organization that survives over
time (Kouzes & Posner, 2002).
Leadership has been defined in many ways. I have adopted the definition created at
the Globe Project (Calgary, Canada, 1994), a global meeting of 84 social scientists from 56
countries: "Leadershipis the ability to influence, motivate and enable others to contribute to
the effectiveness and success of the organizationof which they are members" (Bass, 2009, p
23). Yukl and Lepsinger (2004) describe several different types of leadership: heroic leader,
born leader, and celebrity leader (see Exhibit 1: Myth About Leaders (Yukl & Lepsinger,
2004).).They also discuss the differences between leaders and managers.
There are significant differences between leaders and managers, although both roles
can be held by the same person. The person who is not a leader but merely a manager does
not envision an attractive future for the team; does not encourage team members to improve
1 VUCCA
is defined as V: volatile, U: uncertain, C: complex, C: chaotic, A: ambiguous.
their performance; likes to control outcomes; and does not allow others to make their own
decisions (Bass, 2009). Management relates to the status quo; leadership is about change. Not
everyone can be good at managing and leading at the same time (Kotter, 2007).
Leadership is a contextual process involving interrelations between people and
situations. When analyzing leadership, it is difficult to create a unique and non-biased theory
or framework (Walter & Waldman, 2003; Schein, 2006).
Other studies focus on the personal skills required to lead. Goleman (1998) found that
good leaders usually have a high degree of "emotional Intelligence". Emotional intelligence
has five components: self-awareness, self-regulation, motivation, empathy, and social skill
(see Exhibit 2). Goleman emphasizes the importance of emotional intelligence at the upper
levels of a hierarchy because, at that level, he says technical skills have little relevance.
A summary of representative leadership theories are presented in Table 2-A.
Table 2-A: Representative Leadership Theories
Leadership theory
Type
Characteristic
Implicit Theory (ILT)
Cognitive
Grounded
"Great man"
Cognitive
Biologicalgenetic
Biologicalgenetic
Traits
The Warrior Model
Transactional
Charismatic transformational
Servant
Traits
Traits
People have in mind a different concepts of leadership.
Leaders' prototype.
Leaders are whomever people define as leaders.
View of leaders based on "models" as used in training and
development program
Wars are won or lost depending on the leadership of the
opposing forces.
Leaders influences by setting goals, specifying desired
outcomes, exchanging rewards or accomplishments.
Leaders provide confidence to followers to perform beyond
the expectations, broadening and elevating their goals.
Leaders need to curb their egos, convert their followers into
leaders, and became the first among equals
Leaders that rely on 6 or more emotional intelligence
capabilities are more effective than peers with the lack of that
strength
Some styles are most likely to succeed in a given situation
Situational
Rationale-deductive
Sources: Bass, 2009; Goleman, 1998. Adapted by author.
Emotional
Intelligence
Traits
2.2
Effects of Leadership in Organizations
There is no common point of view among studies addressing the effects of leadership
on organizations. Some scholars argue that leadership matters; others argue that it does not
(see, for example, Nohria & Khurana, 2010; Pfeffer, 1989; Kotter, 2007; Bass, 2009).
Several researchers however have found that good leaders have a positive impact on
organization performance (see, for example, Hambrick, 2009; Nohria & Khurana, 2010; and
Wasserman, Bharat, & Nohria, 2010).
Does the quality of leadership matter? Some evidence suggests that it does. Two
examples come from major changes in the auto industry. Daimler-Benz merged with
Chrysler at late 1990s when both were considered among the best and more profitable
companies in the industry. Analyzing the outcome following the merger, it was apparent that
the leaders at Daimler-Benz and Chrysler made a poor decision since the merger did not have
the intended results (Badrtalei & Bates, 2007). On the other hand, the transformation of
Nissan under the leadership of Carlos Goshn (2002) was a success that dramatically
improved the company's profitability. Yukl and Lepsinger (2004) claim that differences in
the quality of leadership among companies explains differences in performance. Leaders
improve organizations by shaping a common vision, both empowering and enabling
subordinates to create a highly adaptive organization (Bass, 2009), and by facilitating
excellence in others (McFarland, et al., 1993).
Leaders also have an indirect impact on the organization, by shaping employee
interpretations of what goes on in the organization These interpretations in turns influences
the organizational outcomes (Bass, 2009). Herzog (2007) agrees, indicating that in some
global corporations, the lack of leadership is one of the biggest constraints to growth and
solving the most important business problems the firm faces. Leadership allows companies to
maintain flexibility and therefore adapt to changing environment.
A study of 3,871 firms and a survey of 20,000 executives 2 found that 87% of leaders
with high emotional intelligence were in divisions that outperformed the company's annual
goal by 15 to 20%. Divisions managed by individuals who had less emotional intelligence
under-performed by 20% (Goleman, 2000). The Goleman framework is shown in Exhibit 2.
A similar finding reported by Herzog (2007) who found that in less-complex environments,
high performers outperformed average performers by 20% and in more complex
environments, this percentage rose to 50% (Herzog, 2007).
Wasserman, Bharat, and Nohria (2010) analyzed 531 companies from 43 industries
over the period 1979 to 1997. Using firm performance (ROA) as the dependent variable and
year, industry, company, and leader (CEO) as independent variables, they found that the
effect of the leader accounted for 14.7% of the variance in company performance. The
framework he used in this study is summarized in Exhibit 3.
However, CEOs can also have negative effects on company performance. Conger
(2007) writes about "The Dark side of Leadership" (see Exhibit 4). Other scholars have
pointed to leadership liabilities as well (Collins, 2001; Badrtalei & Bates, 2007). Some have
found that large top-management teams and less dominant CEOs do better in a turbulent
environment. The team-approach apparently provides superior information and better
information processing capabilities, and thus counterbalances the CEO's perspective
(Haleblian & Finkelstein, 1993).
2 Consulting firm Hay/McBer. (Goleman,
2000).
Wageman and Hackman (2010) point out that top management teams (TMT) are
responsible for exercising leadership in a social system. The TMT allows the development of
new leaders in the organization, and provides coaching and personal skill development
among participants. The existence of a leading team suggests there will be a smooth
succession to the CEO position, a characteristic that is more often found in companies with
good long-term performance. D. B. Collins (2002) found a positive correlation between longterm performance and the development of leaders.
If leadership is distributed through levels of the organization, a significant leadership
role is based in the Middle Manager (MM). In a 25-company survey, Wooldridge & Floyd
(1992) found a strong positive correlation between the performance of firm and the use of
MMs in the strategy development process.
Aligning leaders across the organization is another issue that affects organizations.
Bolton, Brunnermeier, & Veldkamp (2010) found that leaders across the organization have
their own "utility function" that drives their agendas and goals. Thus, organizations need to
align these utility functions with organization goals. Schein (1996) states that the lack of
alignment among groups can obstruct change and learning in an organization. Hence, the
need for alignment suggests that leaders must generate a common vision.
O'Reilly, et al. (2010) measured the effectiveness of units in healthcare organizations
through patient evaluations (50,000+) and physician surveys (313). The authors found that
the aggregate effect of leadership at three levels (department chief, physician in charge (PIC),
and unit CEO) was highly and positively correlated with improvement in patient evaluations
over time. The highest patient rating occurred when the CEO and the PIC were considered
effective leaders. In other words, the overall quality of leadership in different units was
responsible for "customer" (patient) satisfaction.
As these studies suggest, leadership is a vast and extensive subject. There are multiple
theories, interpretations and valuations. Its highly contextual nature increases the difficulty to
understand it and hinders the development of methods to measure it. But, I do believe that
leadership has an impact on organizational outcomes and leadership is distributed throughout
the organization. Thus, the quality of leaders affects organizational performance.
2.3
Leadership Framework
Several professors at MIT have developed a leadership model focused on the tasks
and capabilities of leaders. The framework is called "The 4 CapabilitiesModel" (Ancona, et
al., 2002). The model assumes that leadership in organizations is always distributed, is
personal, is good management, and is about change. The framework's four capabilities are
outlined and briefly described in Table 2-B.
Table 2-B: The Four Capabilities Model
The 4
Definition
Recommended actions
Capabilities
Sensemaking
Inventing
of coming
Process
Pocunesadh
to understand the
context. Create a
map that even for a
moment, describes
the current
landscape
I Explore the Wider System: Use many types and
sources of data, involve others, learn from the front
and failures, study competitors,
line, successes
customers and outsiders to get new ideas about the
bsns
2.AMap the System: Recognize patterns across disparate
pieces of information and viewpoints, Extract key
message from, create a representation of the system
3.Act and Update: Learn from small experiments,
update the view of organization based on new
information
The ability to
engage indUiateirar
Relatingtadvoacyind
I.Inquiry: Take the perspective of others, encourage the
expression of diverse opinions, withhold judgment
while listening to others
others to
2.Advocacy: Make thinking clear, persuade
consider ideas and proposals, negotiate win-win
solutions to problems,
3. Networking: Develop relationships with people needed
on the "inside", develop relationships with people
needed on the "outside", cultivate a network to offer
and receive help in accomplishing goals
Creating a
compelling image
Visioningtuwh
.aCreatingVision: create a compelling image of new
possibilities for the organization, set high expectations
for what the organization can do, articulate a vision
that addresses key challenges and opportunities, frame
the vision with core values and broader goals group
how each one and
t
2.Energizing communicate
can contribute to goals, use symbols and stories that
communicate the vision, display enthusiasm and
support for vision
Capability to create
the process and
structure to develop
the vision
Source: MIT Center for Leadership (2011).
Ic nnovate: Invent new structures and processes to get
work done, encourage people to experiment and take
risks, act as role model for new ways of thinking and
acting,
2.Build Momentum: tackle problems quickly (from easy
to tough), celebrate success in early change efforts,
learn from initial efforts at making change
3 .Execute: create an action plan to meet key goals, build
coalition of support for change, implement change
using a variety of tactics, modify systems or structures
only after they are shown to work, respond to
unintended consequences of the change process
quickly
The model assumes that every leader is "incomplete". Thus leaders need to work with
others in the organization, wherever "expertise, vision, new ideas, and commitment are
found" (Ancona & Bresman, 2007). This assumption is supported by several authors and
some of their arguments are presented below.
Most scholars agree that the complexity of today's environment implies that no single
leader has the enough skills or experience to manage all the challenges they face (Wageman,
et al., 2008; Wooldridge & Floyd, 1990; Ancona, 2002). It is not possible for one person to
make all the right decisions at the top that will be implemented and supported by the rest of
the organization (Senge, 2006). Organizations have multiple groups and resources are spread
throughout the firm, hence leadership is spread among them also (O'Reilly, et al., 2010).
A widespread assumption among leadership researchers today is that leadership is not
concentrated at the top. Organizations today are flatter and more flexible than in the past.
They are based upon informal and collaborative teams with decentralized accountability.
Leadership is therefore distributed (Mc Farland, et al., 1993). In today's economy where
innovation, technology, and market change are critical, no one person can effectively lead a
company (Ancona & Bresman, 2007).
Senge (2006) developed the concept of an "ecology of leadership," reinforcing the
idea of distributed leadership. He identifies three types of leaders in organization, as follows:
*
Local line leaders: who integrate innovating practices into daily work.
*
Internalnetwork leaders: who are helpers, carriers and connectors
*
Executive leaders: who shape the overall environment for change.
The emphasis on distributed leadership arises for three reasons:
1. Organizational structures are loose, spread out across the system with multiple
alliances rather than multilevel centralized hierarchies.
2.
Organizations are highly dependent on complex, externally dispersed and
rapidly changing information.
3.
Tasks at the team level across the organization are increasingly interwoven
with other tasks inside and outside the organization. (Ancona and Bresman,
2007)
I believe leadership must be developed and supported by companies. In today's "new
organization" (i.e., more networked, flatter, flexible, diverse, and global), decisions are made
at different levels. Information is spread throughout the organization and front-line
employees and middle managers are closer to customers (Yuk1 & Lepsinger, 2004). Thus,
distributed leadership helps companies bring a wider pool of expertise to proving solving and
decision making. Therefore, I believe leadership must be improved at all levels of an
organization.
2.4
Leadership Measurement
Many of the approach to leadership discussed above do not provide tools for
measuring the level or quality of leadership. However, the model developed at MIT has a
tool that can help organizations measure the ability of their employees to lead. This is a
significant resource for leadership development. I believe the four capabilities model is a
powerful tool for companies to describe in a practical way, what leaders need to
accomplished, reducing the complexity and ambiguity existing around the leadership
concept.
To measure the quality of leadership, the Leadership Center at MIT created a "360degree" questionnaire that gathers information regarding the four capabilities. The
assessment was created by LXT Group (2010) and is used as an feedback device for those
attending the MIT Sloan Fellows Program. The assessment provides data on the following
dimensions:
e
Sensemaking
0
Relating
0
Visioning
0
Inventing
e
Leadership signature
e
Performance
Using this tool, each student asked former managers, peers, direct reports, customers,
and other to evaluate the student's leadership abilities. A gap analysis was prepared and
presented to each student to show similarities and difference between their self assessment
and the evaluation by others. This feedback allowed students to reflect on their work
experience in their former organization and, then, select areas where they wanted to improve.
A coach helped the students interpret the report and guided them through the personal
reflection needed to plan future development. Although this tool is a powerful mechanism to
measure the level of leadership quality, there was no longitudinal data collected at MIT that
would allow leadership to be correlated with organizational performance.
Despite the various opinion about the effect of leadership on organizational outcomes,
most of the studies I have reviewed show evidence that support a positive effect between
high-quality leadership and organizational performance. In the next chapter, I present the
challenges most organization face when trying to improve their leadership capabilities and
the types of programs they use for leadership development.
CHAPTER
3.
LEADERSHIP DEVELOPMENT
Leadership development includes both training and education. These programs
provide experiences that enhance the four capabilities needed to lead. Day and O'Connor
(2001) define leadership development as "expanding the collective capacity of organizational
members to engage effectively in leadership roles (with or without formal authority) and
process (to enable a group of people to work together in a meaningful ways).
3.1
Literature Review
Leadership can be taught and learned. This statement is supported by most leadership
scholars (see, for example: Bass, 2009; Goleman, 1998). Models, action learning, reflection,
conversation, and doing are some of the methods available to train people in leadership skills.
The process of leadership development is not particularly clear, however, despite the
significant resources that companies allocate for leadership training. Kemptser (2009)
estimates that US companies spent $60 billion on leadership training in the US in 1999.
Avolio et al. (2010) found that leadership development is the least explored subject in the
leadership landscape. They point out that in the last hundred years, only 200 articles have
been written on the impact of leadership intervention and less than half that number focused
on leadership development. Day & O'Connor (2001) detail some reasons for this lack of
understanding:
1. Lack of opportunity to study this effect in the long term.
2.
Most studies are focused on discrete events.
3. Lack of evidence to support the proposition that systemic approaches generate
greater returns to organizations.
4.
Leadership development has received little scientific attention, since
experiments (i.e., with control groups and independent variables) are difficult
to do.
Some authors (Cogliser & Scandura, 2001; Floyd & Wooldridge, 2004; and Herzog,
2007) say that organizations are facing a leadership crisis owing to such factors as:
0
massive retirements
0
lack of planning for executive succession
0
elimination of middle-management positions that has reduced the number of
executives available for top-management positions
e
increasing use of self-directed teams
e
low priority given to leadership training compared to other organization
projects
*
short-term view.
A survey conducted by Herzog (2007) found that only 47% of executives favorably
evaluate their organization's approach and support of training. According to the American
Society of Training and Development data, overall expenditures per employee for training
have remained steady at about $820 since 2002, for all types of training. In a private survey
of one electronics company, 50% of sales manager stated they "Do not have time to develop
my employees"; 50% of employees qualified for promotion said they "Have no time to work
on my development plan'; and 60% said they "did not have an actionable development plan"
(Adair, 2005).
Cogliser and Scandura (2001) stated that in many cases, succession to leadership
positions has failed due a lack of internal leadership development, combined with a trend of
hiring outsiders to fill leadership positions. In 2004, Herzog (2007) conducted a survey of
276 large corporations and discovered that only 20% were satisfied with the top management
succession process in their firm.
Organizations are apparently short of leaders (Adair, 2005). The UK Institute of
Management (Home & James, 2001) surveyed 1,500 managers and reported:
e
51% of managers thought their employers gave low priority to leadership
development
e
46% said there was no specific budget for leadership training in their
organizations.
e
only 25% said their firm had a clear and articulated framework for leadership
development.
Hambrick (2009) argues that firms that invest in leadership training are better
prepared for organizational change, and thus perform better in a turbulent environment.
Herzog (2007) indicated that when companies fail to developed top-level leadership, the
company's vision is lost and its strength is diminished, Herzog notes also that firms who hire
leaders from the outside have a higher rate (35%) of failure compared with companies that
promote from within (24%).
Companies follow different strategies for developing leadership. But, according to
Conger (2010), most have had problems. The problems include:
*
lack of rewards and ongoing support
a
few resources dedicated to leadership development
0
limited opportunity for professional coaching from senior executives
*
the focus changes frequently as each new CEO favors a different program.
The leadership dearth seems so widespread to some authors that they suggest the use
of leadership substitutes to overcome this problem, such as:
e
explicit rules, procedures and rigid reward structures (Vecchio, 2007).
e
strategies to improve leadership weakness (Howell, 2007).
This approach suggests that there remain skepticism as to whether or not leadership
can be learned. Some studies have found that leadership training produces only small effects
(Burke & Russell, 1986). Other studies suggest that leadership training can be highly focused
and sucessful. For example, Burt and Ronchi (2006) found evidence that executive training
can be precisely aimed at specific skills and thus help executives understand and work more
effective within an industry or organizational network.
Leadership development can have, according to Conger (2007), positive outcomes if
they help managers understand the role of leaders in the organization. He argues that
leadership development should allow for the "spread of vision and culture" throughout the
organization as leaders go through job transitions.
Some authors make distinctions between leadership training, education and
development. (Ayman, Adams, Fisher, Hartman, 2001; Kempster, 2009). Nadler (1984)
presents a helpful table.
Table 3-A: Leadership Program. Timing and Target
Type of program
Timing target
Task target
Time required
Training
Present
Present job
Short term -defined
Education
Future
Defined career
Mid term - relative
Development
Future
Not defined job
Long term -undefined
Source: Nadler (1984)
3.2
Types of Programs
Leadership development in organizations has experienced significant changes over
the last few decades. Conger (2010) reports that during the 1960s and 1970s, mid-level and
front-line manager were trained primarily in workshops offered by specialized outside
vendors or by in-house training department. In some cases, senior executives were given the
opportunity to attend leadership programs offered by top-tier universities.
Today more companies rely on in-house and tailored programs that often include
expert speakers or university professors. In these programs, the core of the training is based
on issues the company believes need to be addressed (Conger, 2010). The emphasis is on
"quick results." Conger classifies leadership programs in four categories:
1. leadership training through personal growth
2. leadership development through conceptual understanding
3.
leadership development through feedback
4. leadership development through skill building focused on leadership
competencies that can be taught.
Kempster (2009) identifies different types of programs in Figure 3-A below.
Figure 3-A: Leadership Development Programs
Training
Coaching,
360 feedback,
role modeling
Job training,
Short courses
Functional
skills
MBA
Action learning
Organizational
Executives courses
development
Self learning
programs
Interpersonal
behavior
Education
Source: Kempster, 2009
Adair (2005) identified seven principles that define a "comprehensive" leadership
development program. These include: training, selection, leaders as mentors, opportunities to
lead, education for leaders, a strategy for leadership development, and CEO involvement. In
Adair's view, these are complementary.
Many books present "best practices" for leadership development. Fulmer and
Goldsmith (2001) identify what they believe are the six best-practices companies: Arthur
Andersen, General Electric, Hewlett Packard, Johnson & Johnson, Royal Dutch Shell, and
The World Bank. Those authors found a wide range of practices, but all of them were tightly
connected to the specific organization culture. However, among the six companies, Fulmer
and Goldsmith praised, Arthur Andersen was later found guilty of criminal charges as a
3
result of its fraudulent audit in the 2002 of the giant energy company Enron.
3 For further information, see: <http://en.wikipedia.org/wiki/Arthur-Andersen>.
3.2.1
In-house and Ongoing Work Programs
Day (2001) offers a look at in-house leadership development, pointing out their main
strengths and weaknesses (see Exhibit 6). The specific practices he looks at include:
e
360 degree feedback
e
Coaching
e
Mentoring
*
Networks
e
Job assignments
e
Action Learning
Although these practices are widely used, some authors are skeptical of their value.
Atwater, Brett, and Waldman (2001) showed some unintended negative consequences that
appeared following 360-degree feedback efforts. These negative outcomes include reduced
effort, dissatisfaction with raters, and decreased commitment to subordinates. This type of
program is frequently used for appraisal purposes, despite the fact that it can generate a
negative response.
Action learning programs are another development method. Conger and Toegel
(2001) indicate that these programs have flaws associated with being a singular learning
experience. They also point out that there are often weak links between the action learning
project and leadership challenges; a lack of real opportunities to reflect on the learning
experience; a limited emphasis placed on team solutions and learning; and a poor follow-up
on project outcomes.
Conger (2010) notes that in-house leadership program (see Exhibit 7) typically focus
on: individual skills, socialization of the corporate vision and values, strategic interventions
that facilitate a major shift throughout the organization, and targeted action learning designed
to address specific organizational challenges and opportunities. He criticizes traditional
classroom types of leadership program, claiming that classroom training is less effective than
in-house action learning projects. However, Herzog (2007) would argue that if the action
learning program does not incorporate individual development plans, stretch assignments,
and regular meaningful feedback, it is less valuable. Herzog believes that if development
relies only on supervisory development, it usually does not work.
GE is well known for its in-house leadership training program. GE developed its
Business Management Course (BMC) in 1954. The program lasts four weeks and
participants are organized into small groups. Each group makes proposals for changes to the
organization. The BMC was one the first active learning programs developed inside
organizations and has been widely imitated by other companies.
3.2.2
University Programs
A number of universities now offer some type of leadership program, with some built
into the university MBA program. Conger (2010) points out, however, many organizations
are frustrated by the results obtained from traditional, lecture-based, classroom training
programs. He found that these programs, at best, only partially prepare leaders for
2 1st-
century problems and have little impact on personal development.
Despite this criticism, other researchers have found positive outcomes associated with
leadership programs in higher-education institutions. Ayman, et al. (2001) look at
universities, colleges and other organizations that have leadership development programs as
an option for undergraduates (see Exhibit 8). The authors describe these programs and offer
guidelines for improvements. The leadership programs they studied demonstrated a
significant number of positive attributes. These programs use multiple approaches for
delivering program content and provide opportunities for students to apply their leadership
knowledge. Their deficiencies include an absence of leadership theory, the lack of
individualized feedback, a discontinuous process of learning, and simplistic program
evaluation.
In the end, the requirement for increased leadership competence in order to succeed in
the global economy has driven companies toward in-house and tailored programs as their
preferred means of leadership development. These in-house programs allow executives to
work on issues related to their specific companies and customize each program to company
specific needs.
3.3
Measuring the Return on Investment
Regardless of the type of program selected by a company, its organizational
effectiveness should be measured. However, performance improvements obtained via
leadership programs are hard to measure due their complexity and magnitude (Avolio, et al.,
2010). Part of this complexity is driven by the fact that leadership development is a long-term
process and there are few accurate procedures for measuring how people change over time.
Gentry & Martineau (2010) use hierarchical linear modeling as a technique to explain how
people evolve over time as a consequence of leadership development. The authors point out
that it takes time to obtain meaningful outcomes in individuals, groups, teams, or
organizations. People learn in different ways (concrete, reflective, abstract, and active) and
have different learning styles (accommodative, divergent, assimilative, and convergent)
(Kolb, 1973) (see Exhibit 10). Therefore they need several ways to apply the lessons and
multiples opportunities for feedback and adaptation. Thus, leadership development needs
measures for short-term, mid-term and long-term outcomes (Gentry & Martineau, 2010).
ROI is a key indicator for measuring leadership development and can be applied to
different types of leadership programs. Phillips and Phillips (2007) present a method for
applying this indicator. ROI is defined as the ratio of benefit to cost. To isolate the real
benefit obtained by a leadership program, there are tools available to compare trend lines and
results after the program. Surveys completed by program participants are perhaps the most
common way to measure individual assessments of leadership development.
Few companies actually analyze the economic impact of their investment in
leadership development programs. Avolio claims that only 10% to 20% of organizations
measure their return on this investment. Avolio proposes the following measure and calls it
Return on Leadership Development Investment (RODI):
RODI = N x T x d x SDy
-
C
where,
e
N = number of participant in the leadership development program
0
T = Expected time duration for change in leadership behavior
0
D
effect size of intervention, defined as the average difference in outcome between trained
and untrained participant
*
SDy = Standard deviation of dollar valued job performance among untrained employees. If
dollarized performance is not available, 40% of the annual salary is a conservative estimate
*
C = total cost of training to all participants.
Avolio calculates RODI, for a 1.5-day program and 3-day program. The research
includes on-site, off-site, and online programs, and also different levels of executives. The
authors found a significant variation between top performers and low performers.
Considering the variation between the groups, RODI varied from a low negative percentage
to 200 %.
Table 3-B: Average Return on Leadership Development Program
Type of program
Average RODI %
Level of leader
On site
off site
on line
upper level
1.5 days duration
middle level
upper level
3 days duration
middle level
Source: Avolio, Avey, & Quisenberry, 2010.
64%
50%
64%
87%
61%
72%
52%
44%
46%
82%
52%
76%
The impact generated by leadership development programs is indeed hard to measure.
Companies use different approaches in an effort to do so; other companies do not have any
type of measurement mechanisms.
I believe leadership can be taught and learned, thus, it can be developed. Leadership
development requires a long-term planning horizon, with short term milestones identified as
well. A successful leadership development program requires many activities and supporting
conditions within the company. However, due its complexity, few companies measure the
return on leadership development investment.
In the next chapter I present studies that support a positive relation between
leadership development and organizational performance. Chapter 5 includes information
about the MIT Sloan Fellows Program and information about leadership and companies
gathered from the Class 2011.
CHAPTER
4.
LEADERSHIP DEVELOPMENT AND
ORGANIZATION PERFORMANCE
In this chapter I explore the relation between leadership development and
organization performance. I begin with a definition of organizational performance, then
review the literature on this topic.
4.1
Definition of Organizational Performance
A useful definition of performance is given by Longenecker (2010). Performance at
the individual level includes ability, motivation, and support. Ability is the skills and talent of
employees to effectively do their job. Motivation is responsible for driving individuals and
work ethics while performing their job. Support is providing employees with the right tools
and resources to perform their job.
Firm performance can be measured in relation to the firm's main competitors.
Dalakoura (2010) uses a scale that measures performance and considers three performance
areas: market, financial, and organizational (see Exhibit II in the Exhibits).
My sense of organizational performance is tightly connected to the organization's
main goal and always relates to a specific period of time. I defines it as the level of efficiency
and effectiveness obtained by the company while pursuing its objective. Therefore, a
standard comparison between companies (using, for example, traditional financial ratios) will
account only for a small part of the organization's performance. For instance, one company
could focus on market share as its main strategy, but if that company's performance is
measured by profitability a focus on market share will miss the company's objective. Thus, I
believe each company should be measured individually against customized standards.
4.2
Leadership Development and Performance: Literature Review
Burke and Russell (1986) studied the relation between managerial training and
organization performance through a meta-analysis of 70 managerial training studies. The
results indicated that managerial training is, on average, "moderately effective". The effects
differ according to the type of training, as shown in
Table 4-A.
Table 4-A: Managerial Training and Organization Performance
Type of training
Effect size mean
subjective learning
0.34
objective learning
0.38
subjective behavior
0.49
objective results
0.67
Source: Burke and Russell, 1986
Collins (2002) also conducted a meta-analysis that examined 103 studies, including a
full range of leadership development programs and activities. She tried to determine the
effectiveness of programs to enhance performance, knowledge, and expertise at the
individual, team and organizational level. She classified the studies into four research
designs: (1) post-test-only control group, (2) pre-test/post-test with control group, (3) single
group pre-test/post-test, and (4) correlational studies. Eight possible outcomes were studied:
knowledge-objective, knowledge-subjective, expertise-objective, expertise-subjective,
financial-objective, financial-subjective, and system-objective, system-subjective. Collins
found that formal training programs with knowledge outcomes were most effective. The
average sizes of the effect 4 are presented in Table 4-B.
Table 4-B: Outcomes of Training Programs
Possible outcomes
EFFECTIVENESS RATIO BY RESEARCH DESIGN
Single group
Pre-test/post-test
Post-test only,
pre-test/post-test
with control group
control group
knowledge-objective
0.96
1.37
knowledge-subjective
-
-
-
expertise-objective
0.33
0.32
1.01
expertise-subjective
0.30
0.40
financial-objective
-
-
0.38
-
financial-subjective
-
system-objective
0.39
system-subjective
-
Notes:
1. Correlationalstudies were dropped by the authorbecause too few studies were found.
2. A dash indicates the sample mean did notfall within the respective effectiveness level.
Source: Collins, 2002
In addition to the above meta-analysis studies, I used the databases EBSCO and
ProQuest (both available through the MIT Library5) to find research studies that considered
leadership development and organization performance. I selected only those published
between 2002 and 2010. 1 found 128 articles in EBSCO and four dissertations in ProQuest.
Discarding articles focused on theories and definitions of leadership, I selected 18. From the
four dissertation, two met the selection criteria. In total, 20 studies were selected. The list of
articles is shown in Exhibit 12.
4 Effect size: measure of the strength between variables in a statistical population or sample based estimate.
<http://en.wikipedia.org/>.
5 <http://libraries.mit.edu/>.
Among the twenty articles, two main groups emerged. The first group, contains five
articles that describe statistical analyses across different companies. The main findings are
presented in Table 4-C. 15 articles focused on a single organization.
Table 4-C: Group 1. Statistical Analysis.
Author
Major findings
Sample analyzed
GiamaQgtekin, et al.
2010.
Companies that use 360 degree
feedback are more likely to create
organizational commitment
93% managers agree that
employees want to receive
feedback and coaching. Only 45%
of managers believe they are
trained enough to coach others, but
80% believe they can improve their
capability
Leadership development is
positively correlated with market
and financial performance but not
with organizational performance.
Leadership development is highly
correlated with environmental
dynamics
Return to shareholders is directly
correlated with motivation,
compensation, and employee
training.
"Procedure ofjustice" is the main
driver for feedback acceptance
4 companies;
company data;
Turkey
50 companies;
219 managers;
individual data;
us
Qualitative effect
on organization
performance
Longenecker, C.
2010.
Dalakoura, A. 2010.
Casalegno1 C. 2009.
McCarthy, A. 2007.
Source: Thesis author
Positive
Positive
112 companies;
company data;
Greece.
Positive in
financial & market
performance.
No evidence in
organizational
performance
228 companies;
company data;
Italy
Positive
520 managers;
individual data;
Ireland
Not clear
The second group includes the remaining 15 studies. All 15 focus on single
organization. Leadership programs in the 15 studies are of many types. A wide range of
development programs are represented and summarized below in Table 4-D.
Table 4-D: Group 2. Type of Leadership Programs (n=15)
Type of Leadership Program
360-degree survey
Executive coaching
In-house formal training program (1 days -4 weeks) for senior executives
In-house formal training program (1 days - 4 weeks) for middle level
University program (1 day to 1 month)
Action learning
Self assessment
On Line support/ written material
Mentoring
Job assignment (challenging roles)
Create a company framework
Upward feedback survey
Create a specific team to develop of leadership program
Talent Forum
Individual plan
Team survey
Aligned rewards
Coaching groups
Ongoing activities
Source: Thesis author
# of companies
that uses this
program
9
9
9
5
4
3
3
3
2
2
2
I
1
1
I
I
1
1
I
As the Table shows, some companies use more than one program. Figure 4-A
shows the number of programs used by each of the 15 companies.
Figure 4-A: Frequency of Program Used.
23
I-
1
0
2
5
6
Diferent types of program used by the company
3
Source: Thesis author
Of the 15 articles, twelve of them were related to implementation of a new leadership
development program. But the goals of the leadership programs were different. Figure 4-B
presents the main reasons a new program was initiated (for further detail, see Exhibit 14 in
exhibits).
Figure 4-B: Reasons to Create a New Leadership Development Program
SUCCESSION & LEADERSHIP PIPELINE
*Improve succession planning
Ensure excellence performance
*Ensure growth
9
Leadership
Development
Program
IMPROVE PERFORMANCE
-Executive team perforrmance-Sales performance
Source: Thesis author
IDENTIFY KEY BEHAVIOUR
0
Improve selection, training
and development
Attract and retain the best
workforce
Create a compelling program
CULTURAL CHANGE
Merge & acquisition
Eliminate bad practices
Need a major and general
improvement
2
Only eight studies disclosure the outcomes of the programs. The most interesting
cases from this eight cases are presented in Table 4-E.
Table 4-E: Group 2. Outcomes of Leadership Programs
AUTHOR
T + D (2008)
Hostetler (2007)
Williams (2008)
Stout (2007)
FINAL OUTCOME
RELEVANCE
78% of participants were promoted after one
year; 22% promoted after 3 month
89 94 issues were resolved. Net income
improved 150% the following year
Company achieved the rank #14 in the Hewitt
Fortune Magazine, Top companies for leaders
A undirected way to measure the
effectiveness of training programs
Direct measurement. Significant
effect on income
A example of a comprehensive and
successful program
Constructive style improves 54%. Aggressive-
Concrete effect on a precise behavior
defensive style decrease 37%
Source: Thesis author.
Based on these findings, leadership development programs do appear to generate
positive effects on organization performance. In the next chapter, I will elaborate on one
type of intervention used by some companies to improve their leadership capabilities.
CHA PTER
5.1
5.
MIT SLOAN FELLOWS PROGRAM
History, Evolution, and Goals
As noted in Chapter 4, some companies utilize a university-based program as one
facet of the firm's leadership development. An example of such a program is the MIT Sloan
Fellows Program, at the Sloan School of Management at the Massachusetts Institute of
Technology. The Sloan Fellows Program is one of the oldest executive training programs in
the U.S.
The Sloan Fellows Program was founded in 1938. Alfred P. Sloan, then president of
General Motors and Erwin H. Schell, Director of MIT's Department of Business and
Engineering Administration, envisioned a program in which engineers with high executive
potential would be sponsored by their company for one year of study that would increase
their business knowledge and develop the capabilities they needed to move into senior
management positions. The program began as the MIT Sponsored Fellowship Program, but
was renamed to Sloan Fellows Program to honor the support provided by Alfred P. Sloan
(MIT, 2011). However, the world changes and company competences need to change too.
This requirement for change led to a revision of the program. In 2004, the Sloan Fellows
Program merged with another Sloan program, the Management of Technology Program.
The nature and characteristics of the Sloan Fellows Program have evolved over the
years. The current mission of the School is: "To bring together mid-career executivesfrom
every corner of the globe, give them aforumfor collaborationand growth, andprepare them
for the most important challenges of their lives." (MIT, 2011).
In an interview with Alan White, Executive Dean of the Sloan School, he pointed out
changes that have taken place in the program over the years. White, a former director of the
Sloan Fellows Program for 14 years, was himself a Sloan Fellow (SF) in 1970. His class was
composed of 47 SFs, 44 of whom were sponsored by their companies, all were men, and 40
were Americans. In contrast, the Class of 2011 has 114 members, sixty one (61) are selffunded, they come from 26 countries, and 20 are women.
White pointed out that American companies have reduced the number of sponsored
employees to the SF program, usually because the cost of having a high-potential executive
spend one year away from the company is believed to be too expensive. Also, U.S.
companies have other alternatives to train employees through Executive MBA programs,
thereby avoiding the absence of the executive(s) from the company. Although the networkbuilding and learning experience gained in an Executives MBA program are different than
those gained in a year-long full-time program, many U.S. companies seem to prefer the
shorter-term programs.
White also said that more companies are using in-house programs. These are
presumably designed to address issues specific to the company, thus avoiding the "one
solution fits all" criticism that some university programs receive. The flip side of internal
programs, however, is the lack of outside networking possibilities. To overcome this, some
companies invite customers, suppliers, and even competitors to participate in their in-house
programs.
Asked about how the SF program develops leadership capabilities, White pointed out
that "it does not develop or create leaders, it enhances and educates leaders to be more
effective through experiences like working in teams and labs, supportedby a knowledgeable
faculty."
I also interviewed Stephen Sacca, current Director of the Sloan Fellows Program, a
position he has held for the last ten years. Sacca is also a SF alumnus (Class of 1990). He
said that beginning in 2004, company sponsorship was not required as a condition for
acceptance into the program. He also said that sponsorship by American companies has
declined. In general, U.S. companies are looking for a leaner structure and many have fewer
resources to invest in educational programs. Sacca said that when he talks with executives in
U.S. organizations, he often hears that "the individualis responsiblefor educating himself
not the corporation." Also in the U.S., Sacca pointed out, as did Alan White, that corporate
executives are concerned about losing a key executive for one year. The perception is that the
opportunity costs are too high.
Sacca said that American companies are more sensitive and restrict their investment
in leadership development during downturns unlike their Asian counterparts. Thus, Japanese,
Korean, and Singaporean organizations maintain their investment in leadership training, even
in downturns. As for European companies, according to Sacca, "they do not have a culture of
sponsorship." Companies in Brazil, Chile, and Colombia have been-and remain-active in
the program and continue sponsor fellows.
The result is that the mixture of companies and nationalities in the SF program has
increased dramatically over the past two decades. A summary of this evolution is shown in
Table 5-A.
Table 5-A: Changes into To
Rank
1990-1994
20 Companies' Representation in the MIT Sloan Fellows Pro ram
#
1995-1999
#
2000-2004
#
2005-2011
#
I
IBM
26
USAF
22
LG
12
NTTDOCOMO
14
2
GM
12
GM
15
GM
9
SINGAPORE MIN. OF DEFENSE
9
3
USNAVY
10
IBM
10
HP
9
USAF
9
4
KODAK
9
LG
10
BANK OF TOKYO-MITSUBISHI
9
MITSUI
8
5
BOEING
9
PRATT & WHITNEY
9
CEMEX
8
IBM
7
6
UTC
9
SIEMENS
8
NIPPON T&T
8
KIRIN BREWERY
7
7
VITRO
9
SIKORSKY AIRCRAFT
8
YAZAKI CO
8
KOREAN AIRLINES
7
8
NASA
8
HP
7
PRATT & WHITNEY
7
LG
7
9
NIPPON T&T
8
US COAST GUARD
7
SONY
7
SAUDI ARAMCO
7
10
MITSUBISHI BANK
8
VITRO
7
USAF
7
US COAST GUARD
7
11
USAF
7
BANK OF TOKYO-MITSUBISHI
6
US COAST GUARD
7
GENERAL DYNAMICS
6
12
AT&T
6
US ARMY
6
VITRO
7
CEMEX
5
13
BP
5
YAZAKI CO
6
LG-CALTEX OIL CORP.
6
DAUM COM.
5
14
GE
5
AT&T
5
NTT DOCOMO
6
HP
5
15
INTEVEP SA
5
BANCO ITAU SA
5
KOREAN AIRLINES
5
BANK OF TOKYO-MITSUBISHI
5
16
MITSUI
5
KODAK
5
MIT
5
GE
4
17
PEDEVESA
5
KIRIN BREWERY
5
MITSUI
5
MITSUBISHI CORP.
4
18
DAI-ICHI BANK
5
MITSUI
5
NEC CORP.
5
NIPPON T&T
4
19
US COAST GUARD
5
NIPPON T&T
5
NOMURA RESEARCH INS.
5
SAMSUNG ELECTRONICS
4
20
USPS
5
SIDERAR
5
SIEMENS
5
USPS
4
DAI-ICHI BANK
5
STATOIL ENERGY
5
UTAIR AVIATION
4
UTC
5
TECHINT-EXIROS
51
__
Note: The column # shows number of SFs who came to the program. Includes sponsored and self-funded SF. It also include students in the MOT program after
the 2004 merger with the SF Program.
Source:Thesis author from Program office database
As illustrated in Table 5-A, after 1990, only five of the original companies
remained in the ranking: three Japanese firms (Mitsui, Nippon T&T, Mitsubishi Bank) and
two American organizations (US Air Force and US Coast Guard). In an informal interview
with a Japanese Sloan Fellow from the Class of 2011, 1 was told that some Japanese firms
use the program as a reward for professional accomplishments and to expose employees to
global perspective and smooth the promotion system.
Education programs have evolved over the years. The proliferation of distance
learning and Internet-based courses, and the appearance of new MBA program, increase
the challenges facing programs like the Sloan Fellows. According to White and Sacca,
more U.S. organizations now prepare their leaders on the job, and competition among
MBA programs has become global. For example, in the 2011 MBA program in the China
Europe International Business School (CEIBS) in Shanghai, more than one-third of the
class came from foreign countries (White, 2011).
5.2
Leadership Content in the Sloan Fellows Program
The duration of the Sloan Fellows program is one year. The content includes
mandatory core courses, electives courses, workshops, and practical experiences.
Beginning in the summer, the SFs are divided in Study Groups (four students per
group) and Learning Groups (eight students per group). The members of these groups work
together for the entire year. The groups are designed by the SF program office and meant to
be "maximally diverse". The leadership content of the program is summarized in Figure
5-A.
Figure 5-A: Leadership Element in the MIT Sloan Fellows Program
A number of the elective courses relate to leadership, others focus on practice
(workshops), still others are centered on theory. Since elective courses are not mandatory, I
have not included them in this summary.
Most lengthy course assignment are completed in groups. This creates opportunities
to practice leadership skills. The SFs' different professions, industries, cultures, and
objectives makes the year-long experience highly suitable to exercising the concepts of the
4 capabilities model taught at the School:
*
"sensemaking": incorporating insights from every SF
e
"relating": identifying, debating, negotiating and accepting final positions
for each decision
5.2.1
0
"visioning": imaging new possible outcomes
*
"inventing": generating a innovative approach to the assignment.
Leadership Development in Sloan Fellows' Organizations
I surveyed and interviewed some of my SF colleagues about leadership
development in the HR departments of their respective companies. Each participating SF
completed a questionnaire (see Exhibit 18). Then, with their support, I contacted HR
managers in the companies listed in Table 5-B.6
Table 5-B: Companies Contacted
Company name
Position of the
interviewee
General Dynamics
HIR VP Corporate
Kirin
Manager HR
NTT DoCoMo
HR Director
Oi
HR Director
Suruga Bank
General Manager
US Coast Guard
Assignment Officer
Country of HR
location
USA
Japan
Japan
Brazil
Japan
USA
Industry
Defense industry contractor
Beverage
Telecommunication
Telecommunication
Banking
Government agency
The findings from this aspect of my study are shown in Figure 5-B.
Some executives were contacted directly through a structured interview or by completing the
questionnaire. Some SF11 translated the questionnaire that was used in their companies.
6
Figure 5-B: Priority Ranking of HR Initiatives
5
Q: Priority given to HR initiatives in the company?
4.5
0
4 J
C.
Z
3.5
0
E
*
3
-1
.5 2.5
U
o
2 Average level
2
Standard deviation
1.5
0.5
0
0.5
0
Succession
planning
Reducing cost
in HR
initiatives
Talent
retention
Increase
talent
acquisition
Leadership
development
technical
programs
Source: thesis author
The most important priority for HR managers is succession planning. They also say
that leadership development is less important for the organization. Surprisingly, the second
most important issue reported is "reducing costs of HR initiatives".
Figure 5-C: Type of Programs
University program (1 year or more)
Action learning (working on company' issues by doing)
Upward feedback survey
Action learning (working on company' issues by doing)
Upward feedback survey
Job assignment (challenging roles)
360-degree survey
In-house formal training for middle level
in-house formal training for senior executives
Executive coaching
Executives MBA or Master
0
1
2
3
4
5
Number of companies that use this program
Source: Thesis author
6
As seen from Figure 5-C, the Executive MBA is the most common Leadership
program, which reiterates how attractive such programs are for companies. However, no
information was available about company sponsorship of employees who attend those
programs.
5.3
Sloan Fellows Class of 2011: Survey Analysis
In order to better understand the SFs' perspective on leadership, I surveyed my
classmates using two questionnaires. The first one (see Exhibit 16) was answered by 74
fellows (64.9%) out of a total of 114. The second questionnaire was completed by 62
(56.4%) (see Exhibit 17).
The class of 2011 Fellows represents more than 20 different industries and come
from 26 different countries. Since the average work experience of this group of SFs is 14
years, I believe the Sloan Fellows represent a knowledgeable and broad sample of
managers. My findings are reported below.
5.3.1
Motivation for Organization Sponsorship
Of those responding to the survey, 44.6 % are sponsored by their company, and
53.4% are self-funded. Most sponsored SFs say their companies use the program explicitly
for leadership training (see Figure 5-D).
Figure 5-D: Company's Motivation for Sponsoring Sloan Fellows
35%
30%
35 -- - -- -----
2---------------
--
Q:If you are sponsored, why does the company support you to come to this
program?
-
25%
15%
10%
5%-
Training in
leadership
Retention
Training in technical
skills
Networking
Other
Note: considers only sponsored SFs
Source: thesis author
Considering SFs who are self-funded, 47% say their companies do not support this
type of program. Surprisingly, 17% said their companies do support this type of program
but the SFs did not ask for sponsorship.
Figure 5-E: Reasons for Self-Funding
Why are you not sponsored by your former company?
The company
doesn't
support this
type of
programs
47%
The company
supports this
program, but I
didn't ask for
it.
17%
I quit the
company to
find other
opportunities
36%
Note: considers only self-funded SFs.
Source: Thesis author
5.3.2
Motivation for Executives
Figure 5-F shows the reasons SF's provide for coming to the program.
Figure 5-F: Priorities for Coming to SF Program
Priorities for coming to the Sloan Fellows Program
(n=74)
0
E to obtain the MBA (or M Sc)
0)
v For training in technical skills
EU
For Training in Leadership
z.
0 For Networking
Less important
More important
Source: Thesis author
Comparing sponsored and self-funded SFs, the most important priority for the
self-funded students is networking. For sponsored SFs it is training in technical skills.
Figure 5-G: Priorities: Self funded and Sponsored
Si]
E to obtain MBA
is for training in technical skills
. for training in leadership
0 for networking
n=74
Self Funded
Source: Thesis author
Sponsored
5.3.3
Company Programs for Leadership Development
In the first survey, 64.9% of SFs stated that their companies had some kind of
formal leadership training as a part of the career development in their organizations.
Considering that the average work experience is 14 years in my Class, I think a high
percentage of SFs did not receive any kind of formal leadership training before entering the
program. In the second survey, 39 SFs indicated the type of leadership program their
companies used.
Figure 5-H and Figure 5-I show types of "on-the-job" and "off the job" training programs
used by the SFs' companies.
Figure 5-H: Types of "on the job" Programs Used by Sloan Fellows' Companies
80%
70%
a>
0
.
60%
4
on
50%
E
0
a>
40%
w30%
S20%
10%
0%
360-degree
survey
Source: Thesis author
Mentoring
Executive
coaching
Job assignment
Upward
Action learning
feedback survey
Others
(n=39)
Figure 5-I: Types of "off the job" Programs Used by Sloan Fellows' Companies
80%
c
70%
u
60%
.>
50%
E
40%
f
30%
0
20%
0
CL
'U 20%
C
10%
0%
0-
In-house program In-house program
Domestic
Executives MBA or
International
for senior
for middle level
University
Master
University
executives
program (1day to
program (1 year or
1 month)
more)
Others
(n=39)
Source: Thesis author
I also asked fellows to classify their companies as small, medium, or large. Figure
5-J and Figure 5-K present the types of programs used by different size companies. There
are no major differences or clear patterns in this mean
Figure 54: On-the-job Training Programs, by Company Size.
100%
90%
small
j 80%
CL
o
70%
u
60%
medium
* large
O 50%
c40%
30%7
l" 20%
10%
0%
Job
Executive
360-degree
Upward
Action
assignment
coaching
survey
feedback
learning
survey
Source: Thesis author
Mentoring
Others
Figure 5-K: Off-the-job Training Programs by Company Size.
100%
90%
small
medium
U large
80%
V)
c
0
70%
'V
60%
o
50%
4
40%
U 30%
20%
10%
0%
In-house
program for
middle level
Executives MBA
or Master
In-house
program for
senior
executives
Domestic
International
University
University
program (1 day program (1 year
to 1 month)
or more)
Others
Source: Thesis author
5.3.4
CEO and Senior Management Team Leadership
Most of the SFs said that the top management in their firms (CEOs and senior
executives) received some kind of formal leadership training. 27% said neither the CEO
nor any member of the senior team had leadership training. A major gap in this percentage
is found when the group is filtered by the sponsored or self-funded variable.
Figure 5-L: Formal Training for CEO and Senior Management
Did the CEO and/or the SMT have a formal leadership training?
60%
E Only the CEO
(U
0
50%
aCEO& some SMVT
a)
<
E
.
40%
E
a CEO & all of the SMT
30%
oo
a0%
10%
2
0 None of them
a)
IU 10%
N I don't know
0%
self funded
sponsored
Note: SMT: Senior management team
Source: thesis author
Asked about the ability of the leadership team to lead effectively, sponsored SFs
(n=41) ranked their leadership team at 3.7 out of 4.0 (scale: 4=Excellent; 1=poor), while
self- funded (n=33) ranked their leadership team at 3.4.
Most SFs said that leadership in their companies is distributed. Differences between
self-funded and sponsored SFs' companies are shown in Figure 5-M.
Figure 5-M: Distributed Leadership
How leadership is distributed in the company?
Self funded
a Concentrate in the CEO
Sponsored
Concentrate in the CEO and
SMT
0 Spread abroad
managerment
U
29%
Spread abroad to all the
organization
It was not a clear
leadership in my previous
organization
Source: Thesis author
5.3.5
Priority of Leadership Development Programs
From the SF's perspective, leadership development programs are not the first
priority in their companies compared to other organizational goals. Figure 5-N shows the
priority of corporate programs based on the size of the organization.
Figure 5-N: Priority of Corporate Programs in Organizations
What level of priority does your company give to?
4.0
' Small
Medium
I Large
0 All Sample
2.5
2.0
1.5
1.0
0.5
0.0
leadership development
Source: Thesis author
product innovation
cost reduction
internationalization
According to those responding the survey, 72% of companies represented in the
class have a leadership development program, yet 40% of SFs have not received any formal
training. Despite the vast experience and hierarchical level of most fellows, only 60% of
them have received a formal training in leadership
Training
5-C:
Table
in
Program
SFs'
Companies
Did your company have a formal leadership
Have you received leadership training
training as part of executive's career
before the Sloan Fellows program?
development?
60%
40%
72%
28%
Yes
No
Source: Thesis author
I asked SFs if they consider their companies as the "leader", "well- positioned", or
"followers" in their industry. Using their classification, I plotted the relationship between
companies that have an HR budget and those that have a leadership development program.
The results are shown in Figure 5-0.
Figure 5-0: Difference Between Leader Companies and Others
Is your company a "leader company"?
100%
-
E
90%
0
80%
Leader (rank 1st or 2nd)
W
0.
e
70%
E
EM
0
well positioned (rank 3rd to 30%)
60%
50%
40%
2
En
30%
V
E
10%
0%
80%
85%
90%
95%
%have budget for HR development
Note: Bubble size indicates the number of companies in each group.
Leader = 32; Well-positioned = 18; Follower = 7
100%
Almost all companies have a Human Resource budget, but a difference can be seen
in the percentage of leading companies that have a budget for leadership development
compared with others. There appears to be a correlation between leader companies and the
existence of a leadership development program.
5.3.6
Leadership outcome
Almost all SFs (96%) believe that leadership improves organization performance.
In addition, most (85%) believe that "distributed leadership" improves organization
performance, and 63.7% believe that a CEO-centric approach to leadership reduces the
company's performance. However, only 10% of SFs said their company has a formal
mechanism for measuring the return on investment in leadership development.
5.3.7
Impact of Sloan Fellows Program on leadership capabilities
The survey includes a self assessment by each SF about the effect of the SF
Program on their own leadership capabilities. From the answers, no differences were
apparent in terms of the size of company, its leading position, or the sponsored/self funded
dimensions. When asked how their skills had improved using the 4 Capabilities Model, the
respondents ranked each dimension about evenly.
Figure 5-P: Improvement in Leadership Capabilities
How much do you feel you have improved your capabilities?
Sensemaking
Relating
Visioning
Inventing
Source: Thesis author
When asked about specific leadership skills, the SFs responded as shown in Figure
5-Q.
Figure 5-Q: Evaluation of Personal Achievements from Participating in SF Program
My ability to effectively enhance the
performance of others has been positively
affected
K
I am a more effective team member
My willingness to value the perspective of
others was positively affected
I will support the leadership development in
my organization
+
I obtained new skills that will allow me to be
a better leader
Stiroriv
disacee
Source: Thesis author
isagree
neut-.1
agree
srongly
agree
5.4
Alumni Survey
In 2008, the MIT Sloan Fellows Program Office administered an on-line
questionnaire that was completed by 114 alumni7 from the Classes of 2005, 2006, and
2007. The questionnaire included follow-up questions, with 48 participants responding.
The main findings of this survey are presented in Figure 5-R.
Figure 5-R: Sloan Fellows Alumni Survey.
Agree &Strongly Agree
Disagree &Strongly Disagree
Iam currently in my ideal work situation
was pleased with my profesional situation directly
following the Sloan Fellows Experience
"Em
PO
Iam more comfortable with conflict resolution as a result
of my Sloan Fellows YEAr
My ability to effectively enhance the performance of
others was positvely influenced by the Sloan Fellows.
OPEN"
During my time inthe Sloan Fellows Program my
profesional aspirations evolved
My willingness to value the perspective of others was
positively affected by my Sloan Fellows training
WIN"
Iam more effective team member as the result of my
participation inthe Sloan Fellows Program
2
Icommunicate more effectively as the result of my Sloan
Training
2I
20% 10r% 01
10% 20%
70% 80% 90% 100%
Source: Russel (2008)
Figure 5-R shows that alumni believe the program improves their leadership
capabilities even if their current position may not be their preferred one. Using this self7 The survey was sent to 236 Fellows. 146 replied, and 114 completed it adequately.
assessment as a measure of the impact of leadership development on organizations, it
seems that the program allowed the SFs to enhance not only their personal skills but their
team performance as well.
The MIT Sloan Fellows program has been chosen by companies and individuals for
leadership development. Both students Class 2011 and alumni, believe they have improved their
capabilities to lead people.
Organizations used different types, combination and duration of program for leadership
development. Most of "leader" organizations have a leadership development program. Most
"follower" companies do not this type of program.
In my belief, the MIT Sloan Fellows Program provides the tools and training for executives
to become more effective leaders, with a broad type of activities to fit with most types of
organizations.
CHAPTER
6.
CONCLUSION AND FURTHER RESEARCH
My belief is that leadership has an impact on organizational performance. A high
quality of leadership allows those in the organization to improve their understanding, their
sharing of knowledge, their personal skills and their ability to innovate in pursuit common
goals.
I also believe, leadership should be distributed throughout the organization in order
to ensure a quick and accurate response to customer needs and an appropriate interpretation
of the economic landscape. Today, a single leader can not lead an organization by him or
herself. In my belief, a critical role of the CEO (or leading team) is to ensure that their
organization is developing the required quality of leadership across the organization.
Leadership development programs are necessary to build and improve leadership
capability. Leadership programs should be part of the organization's strategy. The
development of leaders must be a sustainable process, even during downturns. As I have
documented, not all organizations have leadership development programs. One reason is
perhaps a lack of understanding of the relevance of such programs and the difficulty of
evaluating the impact of these programs.
In my literature review, I found a positive relationship between leadership
development programs and organizational performance. Two statistical studies and my own
research on published articles support this position. The size of the impact of these
programs remains uncertain and seems to depend on particular organization and industries.
I have also pointed out that companies concerned about leadership use multiple
programs to address long and short term needs. Activities such as 3600 degree feedback,
coaching, mentoring, in-house training programs, support for executive MBAs, and special
university programs are often used simultaneously.
From those Sloan Fellows who responded to my surveys, almost 40% of them did
not receive a formal training in leadership in their previous job. This seems to me a
remarkably high percentage considering that the Sloan Fellows have been working, on
average, for 15 years.
"Leading" companies are more likely to have a leadership development program
than "follower" companies. This finding suggests that those organizations with more
resources have the most opportunity to develop leaders. Companies that are performing
near the break-even point do not have the same opportunity.
How can small companies create a leadership development programs? How can
they deploy scarce resources to such a project? What will be the return on investment?
These questions do not have an easy answer. But I believe that if companies create a
leadership development programs, the results would be positive. The evidence in this thesis
suggest as much.
From my experience in the MIT Sloan Fellows program, the 4 capabilities model
provides a way to measure leadership over time. For example, in order to assess the
leadership capabilities of the Sloan Fellows, each fellow answered a 3600 degree survey
before to start the program. This tool is a highly valuable instrument that can be used at
multiple points in time thus providing a longitudinal perspective. If organizations
implemented a leadership development program using the 4 capabilities model and the
360' degree assessment as a tool to determine changes in leadership quality, they could
compare the effects of the program against company performance metrics. The company
could then create a "leadership metric" in order to represent the overall quality of
organizational leadership. A hypothetical example is presented in Figure 6 A.
Furthermore, if longitudinal individual assessment were obtained across time, an
analysis could be accomplished to show how leadership capabilities evolved as a reaction
of the environment. This would address questions about longitudinal performance and
leadership.
Figure 6-A: Longitudinal Assessment of Leadership Capabilities and Organizational
Performance (A Hypothetical Illustration)
-------
20
18
Profit
--
12
Inventing
10
Visioning
Relating
8
ve
a~ Sensemraling
4
2
0
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Source: Thesis author
Implementing a successful Leadership Development program does not seem a
minor or easy task. My suggestion for CEOs that are struggling to implement leadership
programs is to choose a young high potential leader and sponsor him or her to the MIT
Sloan Fellows Program. In this program, he or she will gain a deep knowledge of
leadership theory and practices. When the person returns to the organization, he or she
might be asked to create a Leadership Development Program. The investment, in
sponsoring Fellows and programs, will generate a positive return for the organization, as
many organizations around the world have found.
EXHIBITS
Exhibit 1: Myth About Leaders (Yukl & Lepsinger, 2004).
The myth of....
the heroic leader
the born leader
the celebrity
leader
leaders and
managers
Description
Notion with strong appeal in a culture of celebrity. As no single leader
has the necessary knowledge and expertise to solve difficult problems for
an organization, it is essential to involve other people with relevant
knowledge and diverse perspective.
Researchers have failed to identify specific traits that define successful
leaders. Studies show that most of the successful CEO's do not have the
personality characteristics usually associated with charisma (Conger J. ,
1999)
In US, CEOs represent 45% of company reputation. 90% of investors are
more likely to recommend a stock based on a good CEO reputation. In
today's rapid changing environment, if a firm depends only on decisions
made at the top, the organization will probably be slow and uncompetitive.
They are not mutual exclusive. However, strong leadership can be
disruptive and reduce efficiency and strong management can discourage
risk taking and innovation. But managing is more focused on get things
done and better performance. Both roles can be taken by the same
person.
easy explanation
Leadership is difficult and demanding. Leaders need to be flexible
because the situation is constantly changing.
8
Investor Relations Business. 2000, June 12.
Exhibit 2: Emotional Intelligence at Work.
Definition
Self* ability to recognize and understand
awareness
moods, emotions and drives as well
as their effect on others
Self* ability to control or redirect
regulation
disruptive impulses and moods
* suspend judgment before acting
Motivation
e a passion to work for reasons that go
beyond money or status
* a propensity to pursue goals with
energy and persistence
Empathy
Social Skill
o the ability to understand the
emotional makeup of other people
* skills in treating people according to
their emotional states
* proficiency in managing
relationships and building networks
* an ability to find common ground
Hallmarks
9 Self-confidence
e realistic self-assessment
e self deprecating sense of humor
o trustworthiness and integrity
o comfort with ambiguity
e openness to change
e strong drive to achieve
e optimism, even in the face of
failure
* organizational commitment
e expertise in building and
retaining talent
* cross cultural sensitivity
o service to clients and customers
* effectiveness in leading change
o persuasiveness
o expertise in building and
and build rapport
leading teams
Source: (Goleman, 1998)
Exhibit 3: CEO Leadership Framework.
Scarcity of Leadership opportunities
(industry concentration, exchange constrain)
Resources availability
Low
High
Low
Impotent
High
Constrained
(Low CEO effect)
(moderate CEO effect)
Munificent
Impact
I (Moderate CEO effect)
Source: (Wasserman, Bharat, & Nohria, 2010).
(High CEO effect)
Exhibit 4: Leader's Skills Areas that Contribute to Poor Organization Results
CEO's skill area
Strategic vision
Communication
and impressionmanagement
Management
practices
Sources of failure
* Vision reflects individual needs of leaders rather than those of market
and constituents.
* Resource have been seriously miscalculated
* Unrealistic assessments or distorted perceptions of market and
constituent needs
o A failure to recognize environmental changes
* Exaggerated self description
e Exaggerated claims for vision
* Fulfilling stereotypes and images of "uniqueness" to manipulate
audience
* Gaining commitment by restricting negative information and
maximizing positive information
* Use of anecdotes to take attention from negative information
* Creation of the illusion of control through affirming information and
attributing negative outcomes to external causes
* Poor management of networks, especially superior and peer networks
e Unconventional behavior that alienates others
* Creation of disruptive "in group/out group" rivalries
e Autocratic, controlling management style
o Informal/impulsive style that is disruptive and dysfunctional
* Alternation between idealizing and devaluating others, particularly
direct reports
o Creation of excessive dependence in others
o Failure to manage details and effectively act as an administrator
* Attention to the superficial
o Absence from operational areas of the company
&Failure to develop successors of equal ability
Exhibit 5: Leadership Effect on Organization.(Summary of Articles).
Authors
Wasserman et al.
(2010)
Object of studied
Impact of CEO
leadership in
company
performance
Collins (2002)
Effect of leadership
teams on Long term
organizational
performance
Floyd &
Wooldridge
(2004)
Effect of
involvement of
middle manager in
creation of strategy
0' Reilly et al.
(2010)
Effect of alignment
among leaders and
customer
satisfaction
Main findings
CEO leadership is
responsible for 14.7% of
incremental variance in
ROA ratio. CEO affects the
performance of the
company when there is
scarcity of leadership
opportunity but a high level
of
Method description
Statistical analysis of
531 companies from
43 industries in
USA. between 1979
to 1997.
resources.
The leading team smoothes
CEO succession. This was
correlate with higher long
term performance of the
Comparison between
two groups of
companies.
firm
A positive correlation
between MMs participation
in the strategy decision
process and higher
Survey 25
companies.
performance
A high and positive
correlation between
customer satisfaction and
alignment among leaders.
The aggregate leadership is
responsible for customer
satisfaction
Source: Thesis author
50,000 patient
evaluations and 313
physician surveys.
Exhibit 6: Summary of Selected Practices in Leadership Development.
Practice
360- degree
feedback
Description
Multi-source rating of
individual
performance,
Development Target
Self-knowledge;
Behavioral change
Strength
Comprehensive
picture;
broad
participation
Coaching
Practical focus and
one-on-one learning
Self knowledge;
Behavioral change;
Personalized;
intensive
Perceived stigma;
expensive
Mentoring
Advising/
developmental
relationship. Usually
with a more senior
Broader
understanding;
advancement;
catalyst;
Strong personal
bonds
Peer jealousy;
over-dependence
Better problemsolving;
Learning who to
consult for project
help;
Builds
organization
Ad hoc:
unstructured
Conflict between
performance and
development;
no structure for
Weakness
Overwhelming
amount of data; no
guidance on how to
change, time and
effort
Career
development
manager
Networks
support
Connecting to others
in different functions
and areas
Job
assignments
Providing "stretch"
assignments in terms
of role, function or
geography
Skills development,
broader
understanding of the
business
Job relevant;
accelerates
learning
Action
learning
Project-based learning
directed at important
business problems
Socializations;
teamwork;
implement strategy
Tied to business
imperative; action
oriented
Socialization
learning
Time intensive;
leadership lessons
not always clear;
over emphasis on
results
Source: (Day, 2001).
Exhibit 7: Types of Leadership Training.
Types of
leadership
Best practices
Common problems
training
Individual skill
oriented
Build the program around a single
well delineated leadership model;
Conduct pre-course preparation;
Use Multiple learning methods;
Structure learning around extended
learning periods and multiple
sessions; Support learning with
_Failureorganizational
Socialization of
the corporate
vision and
values
Strategic
intervention that
facilitate a
major strategic
shift throughout
an organization
Targeted action
learning
designed to
address specific
organizational
challenges and
opportunities.
_____________by
Source: (Conger, 2010).
Failure to build a critical mass in
the company;
Limits of competency-based
leadership;
Insufficient time spent on
developing individual skill areas
processes
Select program participants
carefully;
Ensure a well articulated org vision
and philosophy
Have practicing leaders provide
instruction;
Participant selection criteria are
poorly defined or enforced;
Hidden challenges when using
company executives as teachers;
Organizational downturns or
serious business challenges
Move beyond singular initiatives
undermine programs
Ensure that a strategic framework
drives program content and design;
Ensure that the strategy is translated
into corresponding leadership
behaviors and mind-sets, company
capabilities and culture;
Design the curriculum to elicit
group discussion between units and
across levels;
Deploy trained facilitators to
provide critical process assistance;
Cascade the learning experiences
down and across multiple levels
and operations;
Put in place continuous or real
feedback mechanism
Select projects with great care;
Be certain that project deliverables
are extremely clear;
Design multiple opportunities for
reflection;
Ensure active involvement by
senior management;
Provide facilitation and coaching
Poor modeling by corporate
leaders;
Entrenched managers and the
legacy of past relations limit
program impact;
Competing initiatives distract
sponsor support
Lack of consistent reinforcement;
Limitations of facilitators
topic experts________________
No relevant projects;
Dysfunctional teams;
Lack of follow up learning.
Exhibit 8: Universities with Leadership Programs for Undergraduates.
1
Princeton University
35
Georgia Institute of Technology
2
Harvard University
36
University of Southern California
3
Yale University
37
University of Wisconsin-Madison
4
California Institute of Technology
38
Boston College
5
MIT
39
Case Western Reserve University
6
Stanford University
40
Leigh University
7
University of Pennsylvania
41
University of California Davis
8
Duke University
42
University of California Irvine
9
Dartmouth College
43
University of Illinois Urbana
10
Columbia University
44
Penn State University
1I
Cornell University
45
Tulane University
12
University of Chicago
46
University of California Sta. Barbara
13
Northwestern University
47
University of Washington
14
Rice University
48
Pepperdine University
15
Brown University
49
Yeshiva University
16
John Hopkins University
50
Rensselaer Polytechnic Institute
17
Washington University St. Louis
51
University of Texas Austin
18
Emory University
19
University of Notre Dame
20
University of California Berkeley
21
University of Virginia
22
Vanderbilt University
23
Carnegie Mellon University
24
Georgetown University
25
University of California Los Angeles
26
University of Michigan Ann Arbor
27
University of North Carolina-Chapel Hill
28
Wake Forest
29
Tuft University
30
College of William and Mary
31
Brandeis University
32
University of California San Diego
33
New York University
University of Rochester
34
Source: (Ayman, Adams, Fisher, & Hartman, 2001)
Note 1: Ranking generated from 50 colleges and universities as rated by US News and World Report 2001
College Rankins.
Exhibit 9: Stock Prices and Leadership @ Mc Donald's Program (LMP).
Week of Jul 31 2006 :
1993
= MCD 35.41
2000
2002
2004
2006
2003
2010
Source: http://finance.yahoo.com/
The figure presents the change in McDonalds' stock price over time. During 2002 and 2003, the
company had the most negative returns in the last ten years. This was due perhaps to the lack of
capacity to understanding the challenges the company was facing. A new CEO "understood" the
problems and created Leadership
@ Mc Donalds'
Program.
Exhibit 10: :Learning Styles.
Concrete
Accommodative
Divergent
Active c
,
Convergent
Assimilative
Abstract
Source: Kolb,1973
Reflective
Exhibit 11: Firm Performance.
Variable
Market Performance
Financial Performance
Organizational performance
Source: (Dalakoura, 2010).
Items
Sales Volume & Growth
Entrance in new markets
Market share growth
Market share
Strong Brand name
New product development
Fame
Investment realization
Innovativeness
Return on investment
Profit Margin
Profits
Leader development
Employee satisfaction
Employee relations
Modernization
Maintain jobs positions
Exhibit 12: Articles Research. EBSCOHost Database.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
"Bank on Learning." T+D 62, no. 10: 30-32. 2008 EBSCOhost database.
Casalegno, Cecilia, Elisa Cerruti, and Michela Pellicelli. 2009. "Measuring the People Management and
Shareholder Value Creation Relationship. An Empirical Approach from Italian Firms." Economia
Aziendale Online 2000 Web no. 4: 1-35. EBSCOhost
Dai, Guangrong, Kenneth P. De Meuse, and Clarke Peterson. 2010. "Impact of Multi-Source Feedback on
Leadership Competency Development: A Longitudinal Field Study." Journal of Managerial Issues 22, no.
2: 197-219. EBSCOhost
Dalakoura, Afroditi. 2010. "Examining the effects of leadership development on firm performance."
Journal of Leadership Studies 4, no. 1: 59-70.EBSCOhost
de Charon, Linda ChristineLeadership development within a federal government engineering environment:
A leadership program framework based on Myers-Briggs personality types. Proquest Dissertations And
Theses 2002. Section 0543, Part 0454 228 pages; [Ph.D. dissertation].United States -- Minnesota: Walden
University; 2002. Publication Number: AAT 3068410
Dvir, Taly, Dov Eden, Bruce J. Avolio, and Boas Shamir. 2002. "Impact of transformational leadership on
follower development and performance).
Dytham-Ward, Michele. 2009. "Developing the leaders of tomorrow in Abbey, part of the Santander
Group." Industrial & Commercial Training 41, no. 5: 226-231 .EBSCOhost
Elizabeth, Houldsworth, and Machin Simon. 2008. "Leadership team performance management: the case of
BELRON." Team Performance Management 14, no. 3/4: 118-133.EBSCOhost
Gflmiltekin, Gditen Eren, Derya Ergun Ozler, and Fatma Yilmaz. 2010. "360 Derece Performans
Degerleme Sisteminin Orgfitsel Baghlik Ozerindeki Etkisinin Belirlenmesine Y5nelik Bir Aragtirma.
(Turkish)." Business & Economics Research Journal 1, no. 1: 1-20. EBSCOhost
Hostetler, Elizabeth. 2007. "Safety at the Center: A Model that Accelerates Learning." Organization
Development Journal 25, no. 4: P63-P66.EBSCOhost
Jay, Amanda Suzanne The effects of a leadership-development program on the performance of upper-level
sales managers in a Fortune 1000 company .Proquest Dissertations And Theses 2002. Section 0099, Part
0384 163 pages; [Ph.D. dissertation].United States -- Kansas: University of Kansas; 2002. Publication
Number: AAT 3067087.
Kets de Vries, Manfred F. R. 2005. "Leadership group coaching in action: The Zen of creating high
performance teams." Academy of Management Executive 19, no. 1: 61-76. EBSCOhost
Longenecker, Clinton 0. 2010. "Coaching for better results: key practices of high performance leaders."
Industrial & Commercial Training 42, no. 1: 32-40. EBSCOhost
McCarthy, Alma M., and Thomas N. Garavan. 2007. "Understanding acceptance of multisource feedback
for management development." Personnel Review 36, no. 6: 903-917.EBSCOhost
Stout, Brian. 2007. "Leadership Development: Restores Lion Nathan's Roar" T+D 61, no. 12: 68-70.
EBSCOhost
16. Tighe, Eileen. 2007. "Leadership Development." Leadership Excellence 24, no. 10: 13. EBSCOhost
17. Till, Greg. 2007. "Getting Results from a Systemic Front Line Leader Development Program at Raytheon."
Organization Development Journal 25, no. 4: P95-P 103. EBSCOhost
18. Whitney, Kellye. 2005. "in practice: Discover: It Pays to Develop Leaders." Chief Learning Officer 4, no.
8: 48. EBSCOhost
19. Williams-Lee, Audrey. 2008. "Accelerated leadership development tops the talent management menu at
McDonald's." Global Business & Organizational Excellence 27, no. 4: 15-31. EBSCOhost
20. Young, Mike, and Victor Dulewicz. 2009. "A study into leadership and management competencies
predicting superior performance in the British Royal Navy." Journal of Management Development 28, no.
9: 794-820. EBSCOhost
Exhibit 13: Leadership Activities in the MIT Sloan Fellows Program.
Experience
Description
Coaching Session
Review of the 360 degree survey
Feedback
360 degree questionnaire answered by colleges in former
organization
Introduction Lectures
April Orientation lecture: the "new" organization
June orientation
Leadership Framework
Leadership Core Courses
4 Capabilities model
Leadership Seminar
Leading Organizations (15.322)
Managing and leading people in organizations (15.698)
Leadership Electives
Courses
Outbound Experience
Team work
Thematic Trip
Workshops
Wide range
Thompson' Island Experience: Team building.
Deep Dive. Intensive assignment done in learning group.
Study Group deliveries: For courses in summer term
New York Trip: Meeting with Leaders. Conversation about their
personal experience and leaders challenges.International Trip in
May
Several workshops during SIP Period (Fall break between Term
I and 2)
Several workshops during AIP Period (Winter break in January)
Exhibit 14: Reasons to create a Leadership Development Program
Main objective
Number of cases
Reason
with this main
objective
Cultural change
e Acquisition
* Eliminate bad practices
3
Identify key behaviors
3
Improve performance
2
Succession leadership
pipeline
2
Attract talent
Research relations
Total
Source: Thesis author.
1
I
12
e
Need for a general improvement
o Improve selection, training and
development
* Attract and retain the best workforce
e Create a customized program
e Improve executive team performance
* Improve sales performance
e Improve succession planning
* Ensure excellence performance and
growth
e Difficulties to obtain best people
e Learn cause-effect dynamics
Exhibit 15: Case Study Analysis: Reasons to Develop a Leadership Development
Program.
Main Objective
Main reason to deploy the
program
Type of objective
Identify competences needed
for effective leadership
Increase leadership across the
organization
To be a "great place to work"; to
attract and retain talent; to
promote from within
Improve selection, training and
development of leaders
Weak "bench". Problem with CEO
succession
Lack of leaders and low
Lacoleaes and lw
attractiveness for new employees
Identify key behaviors and
training
Develop a leadership pipeline
Modify the culture
Company was acquired
Cultural change
Fill up the leadership pipeline
Ensure excellent performance and
market growth
Succession pipeline
Ensure employees are equipped
to provide excellent service in
the organization that supports
high performance
To attract and retain the best
workforce
Identify key behaviors and
training
Decrease aggressive-defensive
managerial style
Improve Performance of the
executive team
Measure the relation between
organization climate and
organization performance
To help leaders change the
culture
Improve sales performance
Create a measurable program
Diminish assessed by a critical
evaluation of functional teams;
structure and brand
New CEO, Assess a low performing
Executive Team
Climate is used in the organization
Climaesedei
toaitio
To improve performance
Evaluate the effect of leadership
development program on sales
performance
Previous program did not have
measurable results.
Attract talent
Cultural change
Improve performance
Research
Cultural change
Improve performance
Identify key behaviors and
training
Exhibit 16: First Survey. Administered November 14,2010.
LEADERSHIP TRAINING SURVEY.
This survey was sent to all members of the Sloan Fellows Class of 201, 74 responded. My
goal was to obtain qualitative information about leadership programs in different
companies.
Company and leadership programs.
Part I.
1. Are you self-funded in the Sloan Fellows Program? If you are sponsored indicate if
you are sponsored by your company (or organization) or sponsored by another
institution.
a) Self- funded
b) Sponsored by my company
c) Sponsored by other institution
2. If you are you self-funded in the Sloan Fellows Program? Why were you not
sponsored by your previous company?
I quit the company to find other opportunities
a)
The company doesn't support this type of programs
b)
c)
The company supports this type of program, but I didn't want to ask for it.
I am sponsored
d)
3. If you are sponsored, why does the company support you to come to this program?
You can pick all that apply. If you are self-funded, select option e).
a)
Retention
b)
Training in technical skills, like finance,
marketing, strategy, etc.
c)
Training in leadership
d)
Networking
e)
Self-funded
Other reason.
4. If you are self-funded, what are your priorities for coming to the Sloan Fellows
Program?
Less
More
important
important
1
a) to obtain the MBA (or MSc) degree
2
3
4
-
b) For training in technical skills, like Finance,
marketing, strategy, etc.
c) For Training in Leadership
d)
For Networking
e) Sponsored
Other reason
5. Regardless if you are sponsored or not, did your previous company have formal
leadership training as part of executive career development?
a) Yes
b) No
6.
In your previous company, did the CEO and/or the Senior Management Team have
formal training in Leadership?
a) Only the CEO
b) The CEO and some of the Senior Management Team
c) The CEO and all of the Senior Management Team
d) None of them
e) I don't know
7.
How do you judge the leading team in, terms of their ability to lead?
bad 1
2
3
4
excellent 5
ability to lead
8. About the leading team.
Yes
Do some of them have a MBA degree?
No
Part II.
Effects of leadership in the company
9. How do you judge the distribution of leadership in your company?
a) Concentrated only in the CEO
b) Concentrate only in the CEO and Senior Management Team
c) Spread abroad within manager positions
d) Spread abroad to all the organization
e) It was not a clear leadership in my previous organization
10. What do you think are the most important benefits that leadership brings to your
organization? Pick all that apply
a) Makes the work easier
b) Makes the work more enjoyable
c) Improves the performance of the organization
d) Allows to a clear promotion system to move up in the
organization hierarchy
11. In your opinion, What is the effect of concentrated leadership (CEO) in the
performance of the organization?
Reduce the
performance
of the
organization
Improve the
performance
of the
organization
a) Concentrated leadership
b)Distributing leadership
END OF FIRST SURVEY
doesn't
make a
difference
among both
types
Leadership
doesn't have
effect on
performance
Exhibit 17: Second Survey. Administered February 10, 2010. (57 responses)
Part I. Company description
I. What is the industry of your previous company? (classification used by the program
office)
Aerospace
Banking
Business Process Outsourcings
Computer related services
Construction/Real State
Education
Energy
Entertainment
Financial services
Food/Bev/Tobacco
Government
Health care/Medicine
Import/Export/Trading
Insurance
international Finance/development
Manufacturing
Media/Communications
Pharma/Biotech
Technology
Telecommunications
Transportation
Venture Capital
Other
2. Considering your domestic market, how big is your company in term of sales?
Small
Medium
Large
3.
How much is the total sales volume?
Sale last year (in million of USD)(leave it empty for non-profit)
4. How many employees does your company have?
Number of employees (unit)
5. Is your company a "leader company"?
Leader (ranking
1 s'
or 2 nd)
Well positioned (ranking 3 d to 30%)
Follower (the rest)
6.
Does your company have a budget for human resources development?
Yes
No
I don't know
7. Does your company have leadership development programs?
Yes
No
I don't know
8. If yes, does your company formally measure the profitability that leadership
development programs generate?
Yes
No, my company does not have a formal measurement
No, my company does not have a budget for this type of programs
9. What type of leadership training programs are used by your company? (check all
that apply)
AT-WORK
* 360-degree survey
* Upward feedback survey
e Mentoring
0 Executive coaching
* Job assignment (challenging roles)
* Action learning (working on company' issues by doing)
* Others, please specify:
IN THE CLASSROOM
* In-house formal training program (from 1 days to 4 weeks) for
senior executives
* In-house formal training program (from 1 days to 4 weeks) for
middle level
* Domestic University program (1 day to 1 month)
e International University program (1 year or more)
* Executives MBA or Master
* others, please specify:
My company doesn't have a leadership training program
10. To nominate candidate for this program, What process does your company use?
Each executive has a career development plan which include this
program
Senior manager decide who will attend (discretional)
Anyone in the company can apply. Acceptance depends on
superior evaluation
Some employees can apply, depending on their position &
individual performance
My company doesn't support this kind of programs
I don't know
11. What level of priority does your former employer give to leadership development?
12. If you are sponsored, do you know your position after the program?
Yes
No
I am self funded
13. In your opinion, What level of priority does your company give to following
programs?
High
some
Low
Leadership development
Product innovation
Cost reduction
Internalization
14. Are Sloan Fellows Alumni currently working in your company?
Yes
No
I don't know
15. Regarding the Sloan Fellows executives in Questions 14, how much do you agree
with the following statement?
Strongly
disagree
Disagree
Neutral
Agree
Strongly
agree
I don't
know
Most of them move up in the
organization structure
Did they face new challenges after
their return to the company?
Most of them quit the company after
returning to it.
Did they improve the performance of
their division/unit/company when they
returned?
There are not Sloan Fellows alumni in
my organization
Part II.
16. Considering the 4 Capabilities Model, how much do you feel you have improved
your skill in each area?
nothing
few
neutral
some
a lot
Sensemaking
Relating
visioning
Inventing
17. How much do you agree with the following statements?
Strongly
Disagree Neutral
As a result of the program,....
disagree
My ability to effectively enhance the
performance of others has been
positively affected
My willingness to value the perspective
of
others has been positively affected
I am a more effective team member
I obtained new skills that will allow me
to be a better leader
I will try to support the leadership
development in the organization in
which
work
END OF SECOND SURVEY
Agree
Strongly
agree
Exhibit 18: HR questionnaire
I collect six questionnaires from organizations that are sponsoring Sloan Fellows in the program.
Some of these were done by phone call or email. In one case, my survey was translated into the
Japanese by one classmates. In most of the cases, the VP or Managing Director of HR answered the
survey. More detail on the companies and interview appear in Table 5-B.
Your Name:
Position:
Company Name:
Country Where Your Headquarters is Located:
Main Activity of the Company:
1. In what priority are these initiatives ranked at your company? (Mark one X per
activity)
Activity
High
Medium
Low
Develop technical skill-oriented programs
Talent retention
Reducing cost in human resources initiatives
Leadership development
Succession planning
Increase talent acquisition
2.
In your opinion, is leadership is a scarce resources?
Scarce resource
In your company
In your industry
Yes
No
3. What challenges are your leaders facing at this time?
Please describe:
4. Does your company have a formal program for leadership development?
Yes
No
I don't know
5. What type of leadership development program do you have? (Pick all that apply)
AT-WORK
*
e
e
*
e
*
*
360-degree survey
Upward feedback survey
Mentoring
Executive coaching
Job assignment (challenging roles)
Action learning (working on company' issues by doing)
Others, please specify:
IN CLASSROOM
e
0
e
0
In-house formal training program (from 1 days to 4 weeks)
for senior executives
In-house formal training program (from 1 days to 4 weeks)
for middle level
University program (1 day to I month)
University program (1 year or more)
Executives MBA or Master
e
others, please specify:
e
My company doesn't have a leadership training program
6. Does your company measure the result of their investment in leadership
development programs?
Yes
If Yes, How does your company measure this ?
No
I don't know
7. What are the most successful initiatives or experiences that your company has
conducted in the area of leadership development?
Please describe,
8. Would you like to comment on a relevant issue for your company that is related to
leadership development that could be useful for the purposes of this research?
Please describe,
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